McTag wrote:I may be wrong, but I think it refers to pubic hair.
If someone has a firm grip of your pubic hair, they have your complete attention.

That sounds absolutely right to me. The expression's a bit saucy on reflection but it has fallen into the vernacular (of a somewhat permissive society some might say?) now. That the term is pretty graphic, is something everyone will agree.
On second thoughts though, perhaps "permissive age" has nothing to do with it. A great 17th century poet Andrew Marvell wrote in his legendary love poem "To his coy mistress":
"then worms shall try
That long preserv'd virginity,
And your quaint honour turn to dust,
And into ashes all my lust."
The word "quaint" meant something quite different from today!!! It referred to the female reproductive organ!
Saucy language has a probably been around since for ever.
To learn more listen to:
http://www.bbc.co.uk/radio4/adventuresinpoetry/pip/ub64h/
It would be interesting to trace when "to have someone by the short & curlies" first came into use.
A propos, I'm new here and have posted my first question in another thread. I'm uncertain about the expression "to set stock by something" is it "by" or "on" I wonder...
Meantime,
Cheers from a Stephen Colbert fan (now there's a man who has a supreme command of the English language)